In recent years, the proportion of home purchases financed by lending institutions has declined and the use of alternative financing methods has increased. This paper examines the costs, risks and benefits associated with seller‐financing, a popular alternative financing method. The topic is discussed from the perspectives of the buyer and the seller. An empirical analysis is also conducted of condominium sales in Hawaii to gauge the impact of seller‐financing upon the housing market as well as its economic effects upon buyers and sellers. Overall, it is concluded that buyers are the primary beneficiaries of seller‐fina